The exodus

The housing numbers last month sucked just about everywhere in BC and ON. Van and the LM, plus 416 and the GTA are unhealthy places for realtors. Sales have dropped with a thud, especially for detached houses, prices are wobbling and this is shaping up to the worst spring market in memory. Condo prices have held while the value of single-family homes has eroded significantly. The sentiment is negative as rates rise and confidence wanes.

In contrast, money is moving. A two-bedroom condo sold for 25% over asking, topping a million bucks last week in Ottawa. Yes, Ottawa. Boring, snowy, grey flannel Bytown, populated by insufferable people with sensible cars, flat hair and DB pensions. And now Montreal’s hot. The country’s second-biggest real estate market has always been one of the cheapest – and for sound reasons, if you don’t speak French, lack thermal undies or like being married.

Even down into Nova Scotia, houses sell in days instead of months. In the little town I’m visiting, the people on one side are from BC, on the other side from Ontario, and across the street from Connecticut. What cost $300,000 two years ago (a really nice place) now fetches five large.

Why the migration?

Simple. The two big bubble markets have become unhospitable to buyers, populated by sellers who can only be described as greedy, and governed by politicians who have meddled as never before in housing. As the Boomers age, move into retirement mode, become unhitched from employment and finally come to their senses, it’s easy to see a torrent of money leaving regions where real estate Hoovers everyone. It’s a migration I wrote about in a book published in 1995. It’ll come around 2015, I said then. And here we are.

It’s hard to have a good quality of life when you’re carrying a million-dollar mortgage. But to afford the average detached house in the LM or most of the GTA that’s what you need – plus another half-million in cash to put down. The land transfer tax alone in Toronto is enough to buy a Mercedes with – money which is flushed away, adding no value to the property. Property taxes and condo fees are steadily increasing, and now the cost of financing is continuously edging up.

It’s this financial vice which has made a lot of people angry, led to the search for scapegoats, and elected governments pledging to ‘fix’ the market. But that’s not happening. As detailed here lately, measures like BC’s suite of anti-real estate taxes and the federal mortgage stress test are simply making cheap houses cost more and unaffordable ones cost less. Nobody wins. So the anger grows.

The best example, bar none, is in Vancouver – a city obsessed with housing and cleaved by property-related emotion. Once our most beautiful place, it seethes. People have been reduced to taking out dangerous mortgages with friends and roommates, living in glorified laneway garages and spending 75% of their take-home income on basic shelter. The house horniness has led to the election of people who garner huge support by punishing existing homeowners and blaming everyone but themselves for the price of real estate they feel entitled to own.

The savings rate in BC, as a result, is negative. The greatest level of household debt is in Vancouver. The risk embraced by people there is off the chart. So un-Canadian. So ugly. No wonder people are leaving.

The pollsters at Angus Reid track this stuff. Earlier this year after federal stats showed less than 5% of Van properties and about 3.5% of those in the GTA were owned by people not living in Canada they found almost all BCers supported measures aimed at taxing the poop out of foreigners. In fact, even though over 90% of transactions are between locals, the company’s earlier survey findings were upheld. When asked why Van houses cost too much, 65% said it was the other guys doing it. It was classic FOMO at work. Blame the Chinese. Blame rich people. Blame investors. But don’t blame me!

Angus Reid found that three-quarters of people wanted government to get involved, and 43% were actually hoping the entire housing market would crash. So, now they have their wish. Speculators are taxed. Foreigners are taxed. Underutilized houses are taxed. Albertans and Ontarians are taxed. Wealthy people are taxed. And there’s more to come. The market cannot withstand this while the cost of money is rising and credit’s being restricted. As Vancity and others in BC (plus Meridian in Ontario) adopt the B20 stress test, the result can be dramatic.

The meltdown in equity is likely to be long and sustained. But it could also come in a downward gush. The numbers of underwater borrowers will swell, with 8% of households responsible for 20% of $2.1 trillion in mortgage debt. And guess where they live?

I told a housing worker at the David Busby centre in Barrie that I was looking for a $30,000 home on a lot because that was all I could afford. This is reality and for the real estate market realistic prices are still a long way down from where prices are today. Something like a 95% plus drop. Real estate magnate wannabees better get themselves a good parachute.

A little off topic but here’s a thought: Maybe Poloz and his minions are keeping the official inflation rate below 2% so that all the indexed pensions get the posted inflation adjustment, not what the true inflation rate is. If so, it would probably prevent a 6 or 7% adjustment each year.

Things seem to have slowed down substantially in Victoria. Since mortgage pre-approvals go as high as a hundred and twenty days, it might be safe to say that the stress test is being fully implemented and those who wanted to avoid it have bought. May should be an interesting month…

The meltdown in equity is likely to be long and sustained. But it could also come in a downward gush. The numbers of underwater borrowers will swell, with 8% of households responsible for 20% of $2.1 trillion in mortgage debt. And guess where they live?

Since real estate peaked and went into stagnation (2013), sellers have been incredibly greedy asking for far more than their houses were worth. Incredulously, some buyers fell into the belief property values were still climbing while it was actually drastic changes in the sales mix.

I have been watching the value of my family’s old Brampton house steadily stagnate, while the new owners were under the false belief their equity and hence their wealth was increasing.

Anyone who listens to the latest Ross Clerk podcasts understands this clearly. Ross Clerk has a way of making you feel what he feels, he is such monsterous a legend.

On another note, I went to take in the latest Avengers movie. All I can say is I’m incredibly motivated.

#6 Ken from BC on 05.07.18 at 4:33 pm
A little off topic but here’s a thought: Maybe Poloz and his minions are keeping the official inflation rate below 2% so that all the indexed pensions get the posted inflation adjustment, not what the true inflation rate is. If so, it would probably prevent a 6 or 7% adjustment each year.

For years all inflation has been artificial. We are currently working through a deflationary cycle. If interest rates continue to rise, given the massive distortion in debt obligations, deflationary pressures will only strengthen.

The meltdown in equity is likely to be long and sustained. But it could also come in a downward gush.

———————————————-

I’m a bit more worried about the long-term consequences of people (e.g. wealthy boomers, young families with children that will grow up and become tax payers in another province) leaving and never coming back than the lost home equity.

That’s income tax, property tax and sales tax dollars that may never come back to ON or BC.

I am not surprised the chart changed from 2015 to 2016 as reputable media outlets like Toronto Star and Globe and Mail began to cover the real estate debacle in B.C, Vancouver in particular.

Sentiment is going to be even less tolerant of foreign pools of money, including I’ll gotten gains, buying up property to use as collateral for gambling debts, etc…this year. We have investigative journalism, David Eby and those who won’t be cowed by shrill cries of “racists!!”

Enough laws have been broken in this province for several generations. We have exceeded our corruption quota. It is time to let the law deal with it.

Great, so there will be no RE under $1mil in entire Canada soon, and average family income around $70-80K!
We will have interest only mortgages or 100 years amortization period, because why not.

BTW, that builder from North Van that told me they have more work they can handle, they build homes on the islands and sunshine coast.
I asked him who are the customers, he told me mostly boomers who cashed out of Vancouver, North Van etc.
They sold for 2-3 mil, spend 1 mil for brand new house and have plenty of cash left for retirement.

It’s hard to argue that taking on every last cent of debt that the bank will offer is “un-Candian.” Basically, nobody does it more than us. It is a clear defining feature of the nation. You might as well say that watching hockey and apologizing to people that bump into you on the street are un-Canadian.

Mostly agree, but it is hard to see large number of people moving from the big markets to next tier cities. Specially the immigration (main source of populaion), and weather patterns are in favour of GTA/GVA, in comparison to rest of Canada. Equity is eroding for sure, I bought last month in Toronto, and sold in Ottawa. Feels wait would have helped on both fronts.

Contrary to some of the recent comments on the blog, many Mills are pretty smart, including mine. I was born in Vancouver, and so were my kids, but it’s pretty obvious that none of us is going to stay.

One left for Quebec five years ago, now a bilingual professional with no debt and looking at a good career with decent pay. Another just finishing up his Master’s degree while working full time, will graduate with no debt, and is looking at setting up on the north Island. The oldest is working in the family business but as that can move anywhere (international clientele) I don’t expect he will stay either.

I’ve always told the kids (tongue in cheek) that they can move anywhere as long as I want to live there. Looks like this has been a good strategy, as I don’t see being able to retire in the LM and live any kind of life – too expensive. I’m already talking to them about spending part of the year with each of them when I retire, hopefully in a separate cottage (they each want to buy a couple of acres to live on and I’d be happy in a little prefab somewhere on the property).

Most of my friends and acquaintances who have retired have moved, many to Nova Scotia, and it’s amazing how much more relaxed they are even if they are working. Yeah, they complain about the snow, but when you can afford to hire someone to deal with it it’s not so bad I hear.

This housing cycle will not end well for most Canadians.
it is more than likely the the Real Estate crash/corrections seen previously in Canada,Europe,and the USA will pale in comparison to what is about to unfold in Canada.
Within 12 to 18 Months it will be evident and unrecoverable. cash will be king and excessive mortgage debt will be death. and no the big 5 will not escape nor will the average joe/jane so buckle up and plan accordingly good luck.

Could u provide more info on said condo in Ottawa? One sale doesnt make a market. I wager this is a higher end unit as the Condo market in Ottawa is in the pits – avg sale price is under $300k and many new buildings slated to be condos are being turned into rentals instead.

You’re so full of it. No one believes the Angus Reid poll, it is so obvious to anyone who has set foot in the Lower Mainland that Chinese have overun the market. How else do you explain no commensurate increase in mortgage debt with the increase in property sales? Who else is buying these places with cash other than money launderers?

People have been reduced to taking out dangerous mortgages with friends and roommates, living in glorified laneway garages and spending 75% of their take-home income on basic shelter.

For those who don’t live out here … these are referred to as laneway houses out here in lala land. The city loves them as they can also be taxed on so many levels … and are. So far they haven’t figured out how to tax the eggs that you can get from your Vancouver backyard chickens yet … that I know of. Probably only because they are considered food. But then so are wine kits … at least they help kill the tax pain.

Calling all experienced employees and managers to come and work at head office in Toronto! Come, come vaccancies are waiting for the people to come and lead our operations!
What??? No one qualified is applying!??? What? We are not paying them enough to live here!!!!?
Well, I guess we’ll have to move our head office…
Maybe Barrie or Guelph. Maybe Kingston?

905 North renter with a Price-to-rent ratio of 29.6 – Landlord asks me mid-February if I can be there for to let an appraiser in as it is mortgage renewal time. No worries. This weekend, he tells me the appraisal came in lower than he anticipated and that with the new rules and extra conditions, he didn’t qualify for a mortgage as a rental. Bank suggests that he have another appraiser come by today and it is suggested that he be there to tell them he is living there too. So I let him hang out for this appraisal while I am at work. Not sure what he will do if he doesn’t get approved this time. Last sale in my neighbourhood took 4 months and a 70K drop in price (it was still an increase of $24K in 4 years) and another just listed for about $30K over that neighbour. It is interesting times.

This blog has been wrong on housing for the past 10 years and it will be wrong for another 10 years. Higher mortgage rates and specialized taxes will not bring this market down because the leading edge of this market is foreign money which pays cash. Foreign cash is not afraid of these pathetic little taxes. Sales might decline but the high water mark of prices will not decline. Foreign cash is king. Long live the king.

#14 Mark: For years all inflation has been artificial. We are currently working through a deflationary cycle. If interest rates continue to rise, given the massive distortion in debt obligations, deflationary pressures will only strengthen.

Mark, you are an idiot. When is the last time you bought a liter of gas, a quart of milk, a dozen eggs, some bread, or a myriad of other items essential to day to day life. Notice any change in price? If you want to live in the abstract of economic theory, fine, but theory in this case does not correlate with reality.

[FP] – Anbang seizure whets buyers’ appetites for buildings across Canada and the U.S.: Anbang owns the HSBC Tower in Toronto’s financial district as well as Bentall Centre, Vancouver’s largest office complex

ALL voting systems can be hacked even the ones NOT connected to the internet
“12. Here is a link to the report from the Defcon 25 Voting Machine Hacking Village conference. “By the end of the conference, every piece of equipment in the Voting Village was effectively breached in some manner. Participants with little prior knowledge and only limited tools and resources were quite capable of undermining the confidentiality, integrity, and availability of these systems…

This important report highlights the problems that demand our attention and solutions.
The “Voting Village” at DEFCON in July 2017 was not intended to be something to entertain hackers. It was intended to make clear how vulnerable we are. The report describes clearly why we must act with a sense of urgency to secure our voting systems.
For over 40 years I voted by mailing an absentee ballot from wherever I was stationed around the world. I
assumed voting security was someone else’s job; I didn’t worry about it. After reading this report, I don’t feel that way anymore. Now I am convinced that
I mustget involved. I hope you will read this report and come to the same conclusion.
Douglas E. Lute
Former U.S. Ambassador to NATO
Lieutenant General, U.S. Army, Retired

I don’t believe many people here really understand what has been engineered by the government.
They knew full well that they would inflate the housing market after the financial crisis. They knew full well that manufacturing jobs were going to the east and Mexico never to come back.
They are always starving for tax revenue as they know their workers are overcompensated and they overspend to buy votes.
By inflating unproductive assets like houses it becomes an excellent long term source of tax revenue. Most people stay in their homes for a long time so the government can eventually tax back whatever gains the silly taxpayer thinks he has made.
At the end of the day of course the average Canadian gets poorer and their children face weak future employment prospects. We have a terrible record in Canada of investing in research and development.
There has been an enormous relative transfer of wealth to public sector employees as a result of this idiotic ideology.
This housing bubble thing is just another government created scam to continue the fleecing of the people.

ie, first time buyer purchases a condo (400K new mortgage debt, condo owner buys a town home or semi- 200K new mortgage debt, townhome or semi owner now buys a detached – 200K new mortgage debt so on and so on) without the first time buyer thats a massive loss of mortgage debt and other service related consumables new paint, furniture, tv, RE commission, land transfer tax on and on and on

In the GTA, the lower rung of the market is finished, first time buyers look like their on strike- which means very limited upward mobility for those 2-3 rungs up.

there is no saving the market right anymore, the excess of the past few years must be washed away for the market to be healthy.

Sounds like Ottawa, Montreal, and Nova Scotia are the new hot hot hot property markets. If you missed out on the Vancouver and Toronto housing booms here’s your chance to reap 30% yoy capital gains tax free. Don’t miss out like you did last time!

No market will see 30% annual gains again in your lifetime. The appeal of smaller centres is stability and affordability. Fewer smartasses, too. – Garth

Houses in the 416 aren’t selling? What absolute nonsense. A semi On Stilecroft Drive sold just the other day for $585. It was listed for $500. The new Keeley condo and townhouse development showroom (Downsview park) has been swamped with buyers the past 2 weeks. I rode my bike through the parking lot and it was packed. A new custom house on Lambton Avenue sold for nearly 1.3 million earlier this year and the young couple has just moved in. Everywhere I look, houses are selling and I don’t see any bargains.
I still say, buy a house today, and in 10 years time, it’ll be worth much more than you paid.

“Can you please explain this one. I bought a new build townhouse in 2013 for $353,000 and an identical one two doors down just sold for $598,000 a few weeks ago. And I mean identical…
What the hell are you smoking?”

Sure, sounds like your situation is quite the outlier as the average identical unit in Canada, including the major cities of Toronto/Vancouver, has not appreciated since the 2013 apex.

A good analogy, since you bring up smoking, is finding a 95-year-old life-long smoker in the old folks home, not suffering from tobacco related illness. Sure, its possible, and it does happen, but its pretty uncommon.

BTW, the cost of money is not rising. The long term trend the last 30 years or so, has been down. It will continue to be so. There have been a couple of little ticks upward recently, but that won’t last. The entire global economy is based on debt and it cannot withstand high rates. So rates can’t go up significantly. I say they will be coming down.

#44 MF
Toronto! What vibrant city! Too bad half the people that live there can’t afford a decent life without subjecting themselves to a lifetime of debt servitude.
I happened to love last winter in the city (Toronto) my friends and i wish ther’d be more just like last winter!!!

Has anyone noticed the historical sales from a mongohouse map always shows lower levels than what is reported by CREA? Example Barrie produced 227 or so sales last month per mongohouse, 300-400 per CREA…pick a community & wonder why

I gave multiple reports on this house last year,as I live nearby and used it as an example to show how detached was falling out of favour in Vancouver.

It was not Pink Snow at the time but I tried to detail an elderly neighbors efforts to sell her house and move back East.

It was on the market for roughly 9 months despite being one of the cheaper options in town and it would ideally be bought by a developer and bulldozed as it is not in the greatest shape.

Anyway, apparently after spending the best part of the last year of her life selling her house and moving back East someone wrote me on here and told me she passed away,I thought they sounded credible as I had showed the house multiple times and I didn’t think it was a topic someone would joke about.

Well, I was out washing my car the other day and a neighbor confirmed that she died,I didn’t ask too many questions and as I pointed out on here the main thing I could think about was if struggling to sell the house played any part.

These new guys just took 500k off and no one seems interested,from what I have seen.

I don’t really care if you guys want to rush out and buy a house,I noticed things in my neighborhood and had heard rumblings about things not appearing as the seem where I work on the Westside and I decided to do something about it and keep you guys informed.

I tried to give back to the blog and I wanted to honour my blog buddy Boom by doing something that made a difference to some of the people on here.

Showed some people some stuff,pissed some people off who tried to make it personal.

Since this post is not my most positive effort ,I might as well tell you guys something else.

#71 What can I say about that? on 05.07.18 at 8:48 pm
BTW, the cost of money is not rising. The long term trend the last 30 years or so, has been down. It will continue to be so. There have been a couple of little ticks upward recently, but that won’t last. The entire global economy is based on debt and it cannot withstand high rates. So rates can’t go up significantly. I say they will be coming down
………………………..

The retiree flight to Canada’s hinterland is largely a “white flight” affair with folks leaving gridlocked Southern Ontario and other large urban centres across the country. Prince Edward County, Haliburton, Oro-Medonte, Sarnia, Elora, Fergus in Ontario, Kelowna in BC and of course Nova Scotia.

Most of Canada’s recent immigrants are very happily settled among their diaspora in Canada’s large urban centres and it is difficult to see that changing anytime soon.

Just caught a few bits of the ontario debate. I don’t think wynee will win her own seat. Harvath did good but it boils down to this. Harvath and Wynee going for the youthful commies and public sector workers. Ford will get everyone else……

With crude surging and The USDCAD holding its own. If Ford doesent win. The currency will get crushed.

Did you see Netanyahus presentation last week? Pretty damning stuff. If its true (always have to add that caveat) then either:
a) Iran has awful security/counter intelligence
b) The IRGC assisted Israels intelligence

I would suggest based on all the recent demonstrations the latter is far more likely. The mullahs are not long for this world, big changes ahead.

Home prices are falling in Ottawa, no immigrants come through Ottawa when they come to Canada. The majority of immigrants today are coming through Montreal. Prices are increasing in Montreal. The rest of the country is falling fast due to the B20 rules and mortgage rate hikes. The B20 stress test is killing off the cities where incomes are low which is everywhere except Alberta. Prices in Alberta are nearing the free-fall stage. The rise in the price of oil has done nothing to mitigate the fall in home prices province wide in Alberta. Hopefully these stupid Millennials in Canada will learn the hard way if mortgage rates continue to increase.

Tariffs can and will change that. Only time will tell what extent Trump goes to. The United States has been trying to create inflation, tariffs will drive the inflation rate skyward. Helicopter money would kill the U.S. dollar so helicopter money may never happen.

> Follow the monthly numbers. Montreal is a stable and affordable market, regardless of any hype. – Garth

Yep, not arguing with that Garth. In fact if you agree with this, you surely do not agree with the “research” that came out of Montreal Real Estate Board where they stated in four articles on the same day (and on the radio) that prices *would* rise 5%.

Do you think this is the free press? Same articles on the same day. Each editor got up and thought “I wonder how the Montreal real estate market is doing, I should send a reporter” and they all spoke to the same guy who said the same thing. And they all quoted him word for word.

All the newspapers are failing. They don’t sell enough. They need the advertising money. Which industry has it’s own weekly supplement? Only realtors.

Lots of media subscribe to wire services that distribute articles. Hence the same piece published in multiple markets. There was only one reporter and one story. – Garth

Just in case we are not clear on the people who produced the report and were quoted in every single article, in case anyone thinks they are impartial:

“About the Greater Montréal Real Estate Board

The Greater Montréal Real Estate Board is a non-profit organization with more than 9,000 members: real estate brokers. Its mission is to actively promote and protect its members’ professional interests in order for them to successfully meet their business objectives.”

> Lots of media subscribe to wire services that distribute articles. Hence the same piece published in multiple markets. There was only one reporter and one story. – Garth

These are not really newspapers at this point, are they? They just exist “to actively promote and protect the interest of our advertisers in order for them to successfully meet their business objectives”.

You might not think it’s incredible that a fake report becomes “news” and then “fact” and then the discussion is “in the wake of the fact” within two days, but I find that a little disturbing.

They just bought the whole nine yards. People would have been outraged by this kind of thing a few decades back.

Regarding the land transfer tax. Question #1 – am I correct in presuming that local government collects said tax? If so, is local government municipal or provincial? Question #2 – what is the purpose of this tax, other than taking a chunk out of every R.E. transaction? What are the collected funds for? Is there an actual purpose for these funds, or do they just disappear into general revenues? If there is an actual designated purpose for these funds, has there ever been an audit done to determine whether the collected funds have actually been used for the purpose they were collected for?

#71 What can I say about that? on 05.07.18 at 8:48 pm
BTW, the cost of money is not rising. The long term trend the last 30 years or so, has been down. It will continue to be so.

I tend to agree, but each particular asset class has a ‘cost’ of credit when such asset class is pledged as collateral.

For example, over the past few decades, largely due to a combination of factors including the CMHC, and regulatory treatment by the OSFI, there has been a preference for housing-backed credit over other asset classes. “Joe sixpack” borrowers have been able to get mortgages at rates (relative to the BoC curve) that previously would have only been available to large corporations. There was a time in the past when bankers would never dream of giving non-businesses (ie: retail consumers) lines of credit or loans at “Prime”, nevermind the lower-than-prime rates that were common in the past.

Now that housing prices are going down, lenders are demanding greater risk premia to make up for the fact that lending against housing as an asset class is riskier.

Thus, cheaper credit will flow elsewhere. You can borrow a million bucks to finance stock purchases for around 2% these days, cheaper than a floating rate residential mortgage. Large corporate borrowers are seeing their finance costs falling. Bankers will still need to lend savings lent to them by depositors — they’ll just lend them to credit prospects outside of the housing market and the FIRE sector.

The end result hopefully will be a revived private sector in Canada. But it’ll be a rough ride given that housing ownership is a lot more ubiquitous in the average household’s balance sheet than business ownership.

Think positive brudda!
Hopefully Freedom First is outta the country or incommunicado.
If the reason for the “silence” is more serious than that……. bummer.
You cant change it and dwelling on it only makes it worse.
Give your wife a hug. Take her out for dinner.
Hoist a toast for “Freedom First”.

Keep in mind kids that houses only go up in price for 5 reasons:
1. Inflation – relatively low currently.
2. Lowering interest rates – they’ve bottomed.
3. Increases in income – have you seen those numbers?
4. Population growth from birth rate – ditto.
5. Demand due to immigration. Selected locations.

I honestly think that in 10 years time people who bought recently will be lucky to pace inflation, cover maintenance, cover interest costs, and cover the transaction costs of moving. It’s a pretty tall order when many have hoovered 500k+ mortgages.

It’s very true. And there is more. You can see the stars at night in smaller centres. The air is cleaner and birds and wildlife are about. Those little creatures will suck the stress and worry out of you effortlessly. All the major irritants of big city life are absent and they are just too many to list. There used to be more reasons to put up with the chaos of big cities, but with the digitally connected world we live in not so much.
The world comes to you these days. It’s all on line. If you need a city fix you just plan a weekend away, and it need not be Toronto. Boston, New York, San Francisco for a weekend, whatever. The real prize is living in a place that has character, charm, the amenities you need and the freedom to live a quality life.
The Jag knows such a place, but sure as hell isn’t going to advertise it here.
Of course if you prefer the sound of sirens, police helicopters overhead 24/7, flotsam jetsam all about in various states of undress and drug induced consciousness……well, have at it. Or as Alice Cooper used to say, ‘Welcome to your nightmare’.

Toronto, you suck so bad. Your MLSE teams, your traffic congestion, your pathetic politicians, your idiotic population gambling everything on slanty semis and window-wall condos that will barely last a decade before major repairs are needed.

The Leafs, the Raptors, these are perfect metaphors for your fifth rate wasteland of a wannabee world class city.

speaking of Polls
“Almost six-in-10 residents of British Columbia think it is time to look at an outright ban of foreign investment in real estate in the province, according to the results of a Mustel Group survey conducted in partnership with CBC.”

What do idiots in Vancouver do when the market is about to cave in? They double down. Sister has a 3.0M east Van house but just bought another tear down for 2.0M and will build a new house on that lot for 1.0M+. All in she will be leveraged into real estate for 6.0M. I’m getting a front row seat on this insanity. 10 yrs of rock bottom interest rates plus a blind eye on money laundering thru BC casinos is the cause.

New York’s Democratic Attorney General, Eric Schneiderman has been a prominent voice in the #MeToo movement – suing Harvey Weinstein in the wake of his sexual misconduct scandal and advocating for women’s rights. Now, Schneiderman himself stands accused by four women of choking, hitting, and threatening them during brutal, alcohol-fueled sexual assaults.

If you checked my previous comments I said to buy Toronto and Montreal.I also said to buy Bitcoin near $1000.
Victoria is slowing down where only high wage earners people are buying.Who would of thought a house would take 3 to 5 days to sell in Victoria.For so many years houses would sell with multiple offers over asking price before your morning coffee on the day of listing.I still can’t believe it!

Renter in Surrey said: BTW, that builder from North Van that told me they have more work they can handle, they build homes on the islands and sunshine coast.

My friend is a carpenter on Bowen Island. 3 years ago he regularly had to head to N Van/W Van for work. For the past few years he has more work than he can handle right on the island. In the meantime, crappy old houses have gone from 350k to 800k.

Mark #70 “Sure, sounds like your situation is quite the outlier as the average identical unit in Canada, including the major cities of Toronto/Vancouver, has not appreciated since the 2013 apex.”

You can’t possibly believe what you write. My last rental in Burnaby on a duplex lot was assessed at $1.1m in 2012. In 2017 when i was evicted because the owner was building a duplex the assessment was $2.1m.

A friend of mine live in this building – not this apartment but this building on a regular basis excitedly tells me what the latest unit sold for. Some background – she bought about 10 years ago for about 280k. Watched it go nowhere for 8 years – it actually dropped to about 255k before the special assessment of about 30k was resolved. In the past two years it’s gone from 300k to 550K. I just noticed this listing and it’s the same as hers and they’re asking 610k.

I could go on and on with examples like these. The Upton Sinclair phrase about it being difficult to get a man to understand something when his salary depends on him not understanding it springs to mind. Does your salary depend on you not accepting that housing has boomed since 2013?

Re #29
Garth, I have been following you from the start, and for the most part, we are aligned. However, you really need to stop with the “foreigners haven’t had a major influence on the market” schtick. It doesn’t stand up to what what those of us who have witnessed the transformation in the LM over the decades. You, my dear respected columnist, have fallen into the same rhetoric as the boards you criticize. You use metrics slanted to support your claims such as the percentage of foreign ownership numbers. We all know how easily those numbers are skewed. Never have you lost more credibility than when you attempt to make this argument. My family has been in the land development in the LM for over 60 years, so yes, I can speak with authority. Most of my father’s customers are, lets say expatriates so that we don’t categorize them into one group. The transformation of the LM is extreme in the least. And there’s no animosity or regret in my message. The forces that enabled the transformation are no different than any other change in our makeup from foreign influence in the last 200 years. But it’s real. Please, please stop insulting those of us who have spent the last 40+ years of our lives here in the LM and witnessed the change. Especially those like me, who embrace cultural diversity and are offended by your comments implying that we, born in the LM and nurtured here are somehow intolerant or unwilling to welcome diversity and change.

I completely disagree. My 1 million in liquid assets buys SFA in the LM today, but it will buy something very nice if prices collapse.

If a person can’t afford a house at 7% interest, then only they themselves are idiots for thinking they can “afford” a house at 2.35%…. I guess the B20 implimentation just shows how irresponsible people are.

Do your own stress test, and do it on one income. Anyhoo, 1 acre SFD houses in langley are starting to tumble…… Probably ground out just above a million.

I can go with 8% of people holding 20% of mortgages. I remember reading somewhere that 40-45% home owners are mortgage free. Add on your renters & that leaves a minority holding the bag.
Federal stats don’t mean nothing as far as who owns what.
The government is clueless until they take a peek into the trust agreements.
Money is moving out of Van into the smaller southern B.C. towns & farther for sure. Its looking for quality, just like the billions coming in. My assessment went up 500k last year & the place next door sale pending will push next years assessment up another million maybe two. When is this meltdown supposed to start? Tomorrow? Last week? I guess you guys back east just can’t comprehend the liquidity, the access to cash around the Pacific Rim. Think Atlantic Rim 100-200 years ago to get you in the mood.

Hey Garth! I am so relieved to read your Call to Arms for Baby Boomers to retreat to the East Coast. They’ve worked hard all their lives and now are cashing out, taking their hard earned money to the outskirts of Canada. Hopefully they find a way to squeeze as much as they can out of social care while limiting the tax they spend. Good on ya, Buddy! You wouldn’t want them to waste their time think about the next few generations behind them. “Go on, strong Baby Boomers go out to the east coast, preferably out to St John’s Nfld and enjoy the iceberg tours. Just get a return ticket.

I watched live streaming of debacle yesterday it was interesting, went in direction I thought it will. Few times doogy did good but harvath did better, while wind was on defence all the time.

What I extrapolated from all that yesterday is no matter who is elected Ontario will not turn on a dime and become poewr house it was before. I remember Burlington street in Hammer, late 90s many companies starting wage 15+cad an hour, just the factor that minimum wage now 20 yrs later is also entry labour rate is telling.

This sound bite bring a jobs back efficiency is not happening. Some semiconductor and electronic manufacturing will be coming back mainly because funny hard coded backdoor stuff. But manufacturing I don’t think so. In dollar sign we trust.

According to cost cutting manual developed by an american company, no self respecting corp will chose place to make stuff and widgets where it facilitates need heat and snow removal 6 months of the year, unless sizable government grants…

Mediocrity in Ontario will continue uninterrupted regardless of party in power.

The internet costs me nothing because I use a laptop computer and access public WiFi. Half the year I live in my car and the other half I sleep on a mat in a church. I can’t afford a phone, my worldly goods are mostly in storage and I get intermittent work building stairs at a stair company. The work is intermittent because of a lack of advertising, high home prices crushing the ability of people like me to safely buy a roof over my head. Even though I am good at what I do wages are static and are soon going to be minimum wage for skilled labour. My situation is not unique.

The SFH, Condo market in Canada is like buying bitcoin or another cryptocurrency. You don’t have anything that has produced anything. You’re just hoping the next guy pays more. You aren’t investing, you’re speculating.

Sexy week long power cuts in the winter (hope you bought that $10,000 back up generator).

Sexy all your heat (and your generator) is powered from a tank of propane in the backyard. Hope that propane refill truck can get through the snow drifts.

Been there, done that.

There is a special sort of hell reserved for those who have a sewage pump in their primary septic tank and a private sourced well water supply, and are stuck in a winter power cut for days. The toilets get this special stench to them, that once you have smelled it you never forget it. Nothing you dump in there helps.

While you freeze to death in the dark, you get to smell your own excrement slowly decomposing in your over flowing toilet.

Yeah, I’ll stay in the city. Thanks but no thanks…
Montreal, Ottawa, Halifax – apparently they all have sewers and drinking water. Who knew? – Garth

Re:#120
The real stress test is can you afford a house under the three years pay rule? That means a 25% down payment and the total home price has to be equal to or less than 3 years pay for only one persons income with the balance owing financed at a fixed rate for 25 years. You must not combine 2 or more incomes or count the total family income from many people. Only the man who is the head of the household can have his income counted. I learned this rule from Morton Schulman and it was probably an old rule when he learned it. I have no doubt that the rule was devised for the protection of society. When you cheat and break the rules for the sake of profit or getting what you want all kinds of bad things can and do happen.
If you can’t pay the price asked offer less based on the 3 years pay rule…. Live within your means so that you can live.

Re:#87
I must concur with Garth. Gold is not going to sky rocket if Trump leaves office and home prices will not be going up 50 to 100% per year anywhere especially boom towns. In many of the boom towns many of the people who do the work just get what the law allows and little more. The exceptional pay of the few does not mean exceptional pay for everybody and to assume it does and base home prices on that is a crime against humanity. There isn’t the income or income increases to support such genocidal financial cock buggery now or in the future.
If and when institutional financial crime ends you could see the PMs go up but not in any meaningful way before hand.

The real estate market is a pyramid. New buyers borrowing on the bottom and the money moving up to boomers profiting at the top. Now with restrictions on how much new buyers can borrow, it’s dividing people into different classes. Without enough new home buyers the pyramid has to collapse, no matter how many boomers deny it and say housing is a good investment, because it worked out so good for them. It’s like Amway, Real estate agents even hold seminars telling people how to get wealth through RE and do very little work to get it. Amway probably trains them lol

“The two big bubble markets have become inhospitable to buyers, populated by sellers who can only be described as greedy, and governed by politicians who have meddled as never before in housing.” – Garth
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“Good leaders reach solutions, and then stop. They do not dare to rely on force.” ~ Lao Tzu
[Tao Te Ching chapter 30]

#81 Smoking Man on 05.07.18 at 9:25 pm
Just caught a few bits of the ontario debate. I don’t think wynee will win her own seat. Harvath did good but it boils down to this. Harvath and Wynee going for the youthful commies and public sector workers. Ford will get everyone else……
With crude surging and The USDCAD holding its own. If Ford doesent win. The currency will get crushed.
That’s all for today folks.
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While I’m not quite sure who Harvath & Wynee are (learn to spell idiot) I will agree that this election is only about one thing. Anyone but Wynn! We have already gone though the Bob Rae NDP disaster that took years for Ontario to come out of only to see the Libs spend us into oblivion. We need change here. If Ford was smart he would keep his head down and let the two ladies duke it out. To bad you cant come and be part of the fun we are going to have here June 7th Smoking guy you will probably be standing next to the Taquería with a piece of cardboard.

The land transfer tax alone in Toronto is enough to buy a Mercedes with – money which is flushed away, adding no value to the property. Property taxes and condo fees are steadily increasing, and now the cost of financing is continuously edging up.

My new neighbour two doors down just paid $77950 for his home. The crazy thing is he and his wife already have two Mercedes.

I’m not sure if this will greatly impact the NDP or not with all of the Union sapsuckers out of the NDP’s coffers.
Since Jan. 1, 2017, the political parties have been banned from receiving donations from corporations and unions. That means only an individual can give money, and the maximum amount an individual can give to parties and candidates in a given year is now just $3,600 a year, down from $23,275.

This change developed rapidly during 2016, as stories like this revealed the deep-pocketed donors funding Ontario’s political parties, and raised questions about possible links between donations and government policy decisions.

Premier Kathleen Wynne went from defending her party’s cash-for-access fundraisers in March to canceling them in April. The new legislation to rein in the fundraising was introduced in the fall, and took effect in 2017.

Spending limits will hit union-funded attack ads

Another change for 2018: spending limits for interest groups such as the union-funded Working Families Coalition, which has launched attack ads against the PCs in the last four elections. Such groups will be limited to spending $600,000 in the six months before the campaign and $100,000 during the campaign.

President Trump’s trade war rhetoric is causing a fair amount of economic uncertainty right now. Is he planning to implement tariffs on imported goods from other countries or not? And what about other countries planning their own tariffs on American-made goods? All this back-and-forth debate got us thinking about which industries import the most goods in every state.

The U.S. Census Bureau tracks all sorts of things, including imports and exports moving into and out of each state. Our numbers represent the total value ($M) of goods with a final destination in that state last year. For example, Missouri imported $853M in aluminum in 2017, the highest figure for any sector in the state. All of that aluminum no doubt originated in a wide variety of other countries. We color-coded each industry by its broader category, creating a snapshot of imports on a state-by-state basis.

Top Ten States with the Greatest Amount of Imports ($M)
1. California (Cars): $36,517M

2. Texas (Crude oil): $34,559M

3. New York (Diamonds): $20,296M

4. Illinois (Crude oil): $19,917M

5. Michigan (Cars): $18,404M

6. Louisiana (Crude oil): $15,949M

7. Tennessee (Meds): $9,332M

8. Pennsylvania (Crude oil): $9,189M

9. Georgia (Cars): $9,1467M

10. Maryland (Cars): $8,368M

There is one particularly obvious industry on our map: nobody sitting in L.A. traffic would be surprised that California imports a lot of cars ($36,516M). For the most part, though, there are a handful of surprising clusters around the country, including a group of Midwestern states shaded in orange that are importing millions in medicine. Engine parts dominate the import sectors in North Carolina and South Carolina. All but one state touching the Gulf Coast has its top import from crude oil.

Perhaps the most surprising fact is that so many states import the same type of goods that they export. For example, Texas simultaneously imports $34,559M in crude oil and exports $23,365M in crude oil each year. And it’s not just oil—the same can be said about other industries as well. Tennessee imports $9,332M of medicine each year and exports medical appliances at about $2,320M. Diamonds top the charts in both imports and exports for New York. Computer parts and electronics move in and out of New Mexico more than any other industry.

There are a couple of possible explanations for this phenomenon. First off, things like crude oil are always priced and sold on the global market. That means a Texas oilman can sell his product to a global distributor in Houston, then get his truck’s oil changed with stuff that actually originated in Saudi Arabia. Second, and more importantly, the U.S. Census Bureau calculates imports as the “final” place something is purchased, but that’s not necessarily where it is consumed or used. For example, a company in Texas might buy crude oil from abroad, then process it in one of its 30 refineries, and then sell it to another company which ships it to a different state where it is actually used. The crude oil still counts as an import for Texas but it would take a whole separate article to track where the resulting petroleum products are actually consumed.

Our map represents a quick view of over $263M in top-ranked imports to states around the country. That’s a big slice of the import market, but remember that the total market for imports of goods and services is around $2.7 trillion! President Trump’s trade war rhetoric is therefore potentially more harmful to a much broader swath of the American economy than what our map can capture. That being said, these are some of the industries most at risk if other countries institute counter-tariffs on American goods.”

Garth, don’t tell the GTA crowd this – we don’t want any to considering coming to our smaller, livable cities. I think the future where homes in the GTA are 4-5x the price in most other cities, and the population there are debt slaves for life, seems reasonable.

Those of use who don’t live there, who own our reasonably priced homes, have some good savings, travel a lot, don’t stress out, and can retire early – will just have to muddle along in our boring little cities…

so many people were bullish– stocks have no where to go up. Pack away……..and here we are in May 2018. US markets in the red, Canadian markets in the red, EM in the red. Bonds in the red (as rates are rising).

people were glaoting about their portfolios, some even posting their returns. That has stopped

with QE slowing down, and rates rising we have major headwinds for equities

The Dow is up 15% in the last 12 months. More than real estate. – Garth

Get to a meeting. If AA is to religious for you, check out LifeRing (there are lots in Cali) or SMART Recovery. If you don’t like groups, hire a counselor. Like mountain climbing and scuba diving, there are somethings that, at least at the start, you’d be dumb to try and learn by yourself.

BTW, forget about moderation. Aint’s going to happen. You’d have a better chance making the Olympic high jumping team.

“Those of use who don’t live there, who own our reasonably priced homes, have some good savings, travel a lot, don’t stress out, and can retire early – will just have to muddle along in our boring little cities…”

If you think everyone living in Hogtown is indebted to the max, can’t retire early, is stressed out and can’t travel then think again. Some of us here do all that and have millions in capital gains free homes that are paid for.

Get to a meeting. If AA is to religious for you, check out LifeRing (there are lots in Cali) or SMART Recovery. If you don’t like groups, hire a counselor. Like mountain climbing and scuba diving, there are somethings that, at least at the start, you’d be dumb to try and learn by yourself.

BTW, forget about moderation. Aint’s going to happen. You’d have a better chance making the Olympic high jumping team.
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Isn’t Smoking Mans son a drug addiction Councillor or works at a treatment centre in Niagara Falls? Why doesn’t Smoking Man use a lifeline. He could go “50/50”, “Phone a Friend”, or “Ask the Audience”.

“Party’s over for Vancouver’s luxury property market — it’s now the worst performer on the …
Prices at the top end of the market plunged 7.6 per cent in the six months to March, making it the world’s second-worst performer during that period..”

#117 Ulsterman on 05.08.18 at 12:28 am
Don’t feed the troll…either he is trolling, or is truly clueless lol. My place has gone up 50% since I purchased it in 2014. That’s roughly $300 per day, every day, tax free, for 4 years. I don’t care if housing takes a 20% haircut – I am still laughing.

I think the measures that the government has take will cool things off for a year, maybe two, but the Lower Mainland is constrained by water, mountains, border, and more mountains, and population keeps growing, so do the math – housing isn’t hosed. Sorry Garth, but this is the new normal.

#159 Ian on 05.08.18 at 1:01 pm
oooooh hitting Bloomberg now, Iran deal is dog food!!!
wowza. Foreign Affairs will be all over this one
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Better put some petrol in the SUV tonight! Gas is going up, up, up. Trump is an ill-informed idiot!

Garth would you say that stocks that pay dividends are a better and more ethical alternative to real estate speculation or being a land lord? If people are going to give up being financial vampires and depriving people of habitat for the sake of profit they will need an alternative that delivers the goods.

Three years ago, I spoke of the ‘spillover’ effect of fleeing capital from the Vancouver market to Kelowna, the Fraser Valley and the Island. We have seen astronomical increases in prices in these markets in he past 3 years.

When you sell to a resident or non-resident buyer for millions in Vancouver, you have no problem bidding up the prices of the best homes in surrounding communities. What is an extra 50k or 100k when you just made millions.

I have witnessed the boomer onslaught in my region with outbidding and overpaying. I regularly wait a few months after a house is sold, then observe who lives there. I sometimes pull the title for 10 bucks to ensure I have an accurate trend analysis as realtors do not have accurate data on who is buying.

Isn’t it wondeful that a generation destroyed the livability of the two most populous and economically sound cities in Canada, and then decides to jump ship with their equity and erode the affordability in all surrounding cities. And now they are moving to other provinces, eroding the affordability of all.

While there was a fundamental disconnect between incomes and home prices in Vancouver and Toronto, those cashing out are now creating that same price disconnect between prices and local incomes in every surrounding community.

Eventually people will want to openly discuss the source of the massive price appreciation amidst no fundamental link to local economies or incomes. One day – but by then, the ship will have permanently sailed and everyone here will still be waiting for the mythical measure that will prick the market and restore a semblance of affordability.

Sorry, but there is no end to this capital flight – because there is never-ending extraneous capital coming in to fund that domestic capital flight.

Historically, the last to rise in price were the first to fall. We have seen that with some of the communities surrouding the GTA. And some have advised against buying in the smaller communities that surround the bigger cities and get the ‘spillover’ capital because of this general rule.

However, in my region in south Vancouver Island, houses are still selling in a day and well over asking IF they are quality homes. This is in April – post B20 pre-approval expirations – when things are supposed to crash.

Those same smaller and commuter communites have seen valuations increase 50% in the last 2.5 years, with no end in sight. The boomer onslaught continues because B20 does not impact them. Oh well, another failed measure to curb the market in a long long list of historical failures.

I’ve not had a single problem with my septic system since I’ve moved in (2001). I’ve pumped it twice, it does its job reliably with no input for years on end. No monthly fees, can’t see it, hear it, or smell it. Never owned a “machine” as reliable as this.

Well water is great. Ours is ice cold, with perfect PH and tastes awesome. I can’t even drink city water anymore. Tastes horrible and is obviously loaded with chemicals. Pepsi is probably healthier. I’ve replaced the pump once since 2001, that’s it. No monthly bill here either.

Power outages: had about 3-4 since 2001 that lasted more than a couple hours. One was the north east blackout that affected millions – we lost power for three days – the longest ever. My manhood was not shook, and I don’t even own a genset. Someday when I get much older, I may buy one out of convenience just in case there is another semi SHTF event like the blackout of ’03.

I got a B.I.L. who lives in the city of Kingston. 2 times the sewer line out on the street backed up and filled his finished basement with a two foot thick slathering of extra gooey rancid sewage. He investigated suing the city after the second time – too bad 4U, not their problem, get a check valve. His insurance company said they would not cover the 3rd round, it had to get fixed.

He ended up selling the house explicitly because of this issue. The sewage issue was going to be regular, and no one was going to fix it.

Stuff like this does not happen ever on the IHCTD9 compound – just sayin’…

Progressive Conservative Leader Doug Ford told reporters he’s looking into why actors were paid $75 to be part of the crowd at the Ontario leaders’ debate Monday night.

Ford was asked about the move during a Tuesday morning news conference after actors told local media about the casting call. One actor forwarded CBC Toronto a copy of the casting call, which offered 20 actors the chance to be paid $75 “to play real people at a Ford nation rally” from 2 to 8 p.m. (cbc)

Thanks Vancouver brit and long time lurker. Not quite sure what you guys mean by re-balancing. Should I change the percentage around even if it’s a nice growth mix?
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When you build your own portfolio of ETF’s you pick the weightings at the beginning (e.g. 50% in equity, 50% in bonds). Over time as some ETF’s perform better than others, the weightings will become skewed, say 55% in equity and 45% in bonds.

Re-balancing simply means you would sell some of the overperforming holdings and buy some of the underperforming, to return you back to your original weightings. In this case you would sell some equity to buy some bonds to return you to 50/50.

This does a couple of things. Firstly, it means you always sell high and buy low, which is an obvious strategy to higher returns. Secondly, it maintains your level of risk at the original level you intended. If you don’t re-balance, your high risk return holdings will become overweighted in your portfolio, which is a bad thing if the market crashes and you will lose more than you are comfortable with. Re-balancing periodically brings you back to your initial risk tolerance.

As for changing the % around, that’s a decision entirely up to you. You should pick a portfolio based on your risk tolerance and time horizon. Are you happy seeing the portfolio decline 20% in a bad year? 30%? 40%? 50%? The more risk you can tolerate, the higher your equity holdings should be as these provider higher returns over a longer time period. However, in a market crash the more equity you hold the more you will lose, potentially up to 50% if you hold 100% equity. Most people, like Garth, go with 60% equity and 40% bonds. This provides a stable portfolio with decent returns (~7%). The more equity you add above that, the higher your returns but the higher your volatility. I go 90/10 since I’m young, don’t need the money any time soon and don’t mind the risk. This could feasibly achieve a 9% annual return or more.

The portfolio I recommended above was 75% equity and 25% bonds/preferred shares, which is more aggressive than many but not as aggressive as my actual portfolio. If you think your risk tolerance is low, you may want to reduce the equity weightings and increase the bonds. The biggest mistake you can make is overestimating your risk tolerance and selling in a market crash, so don’t take this decision lightly. There’s a reason most people go 60/40 and it’s largely risk management, not because it provides a better return (it doesn’t).

“If you haven’t listed already, yesterday was a better time than today for you to do so – if you want to save what’s left of those tasty CG’s.”

Let me put this in perspective for you. I have been mortgage free for 30 years…. For my property to lose it’s tasty capital gains, we would have to have Great Depression like deflation. I know people who bought homes in the 50s for 20k whose homes are now worth 100 times that at 2 million.

If everyone was taught proper financial concepts with a touch of behavioral science these bubbles might be a touch less devastating.

The value has to be extracted somehow, and those lofty valuations are proportional and a result of the maximum that can be extracted via rent/interest in the case of real estate. Unfortunately housing is a basic necessity, and if money is available, those with money will gain disproportionately versus the paycheck to paycheck lot.

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The views expressed are those of the author, Garth Turner, a Raymond James Financial Advisor, and not necessarily those of Raymond James Ltd. It is provided as a general source of information only and should not be considered to be personal investment advice or a solicitation to buy or sell securities. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor's circumstances and risk tolerance before making any investment decision. The information contained in this blog was obtained from sources believed to be reliable, however, we cannot represent that it is accurate or complete. Raymond James Ltd. is a member of the Canadian Investor Protection Fund.